Small Businesses in the Federal Market

For those of you who follow our blogs, you are well aware of how we write to our thoughts on Small Businesses in the Federal Sector and of the latest happenings in the Federal Small Business Office. I found this article interesting and wanted to share it with our followers.

A recent article in the “NDA’s Business and Technology” magazine by Sandra Erwin indicates just less than two years ago, the Pentagon warned in a report to Congress that “continued uncertainty will hit smaller, innovative, and niche product companies particularly hard due to a lack of capital resources.”

But Pentagon officials offered a much cheerier outlook last week as they unveiled the results of the fiscal year 2014 small business federal scorecard.

The Federal Government awarded 24.9% of all prime contracts to small businesses in 2014, or about $91.7 billion. Defense contracts accounted for more than half, at $54.3 billion, a figure that earned the Pentagon high praise from the Obama administration.

“This is the highest percentage of contracting dollars ever awarded to small businesses since the 23% goal was established in 1997,” said Small Business Administrator Maria Contreras-Sweet, who appeared at a Pentagon news conference June 26 with Undersecretary of Defense Frank Kendall.

“Small businesses now are filing more patents than ever,” she said. “So they’re also driving innovation.”

The Pentagon has made a deliberate effort over the past five years to boost small business contracting, said Kendall. The Defense Department’s “better buying power” procurement guidelines specifically promote the use of small businesses, “both for innovation and for efficiency and to control costs,” he said. “Small businesses, particularly in the services industry, tend to be leaner and more anxious to get work, and thus tend to be more economic in many cases for the department.”

Defense officials’ upbeat talk about small business contracting is a far cry from pessimistic forecasts that followed the military spending downturn between 2009 and 2013. CEOs of large prime contractors repeatedly warned they feared losing small business suppliers, especially those that make specialized defense-unique products.

Under Kendall, the Pentagon’s industrial policy office launched a sweeping “tier by tier” study of the defense supply chain out of concern for the financial health of small suppliers.

Today, there are no reasons to worry, said André J. Gudger, acting deputy assistant secretary of defense for manufacturing and industrial base policy.

“We don’t have a weak supply chain. We have a very healthy one,” he said. “There’s areas of concern that we have that we focus on, but yes, we have overall a healthy industrial base set up from our first tier to our sub-tier suppliers.”

Kenyata L. Wesley, acting director of the office of small business programs (previous assignment was the head of the APG Small Business Office), credits Kendall’s better buying power for the improved climate. “Better buying power strategically focuses on small business as well as technology and innovation,” he said. “If you look at better buying power 3.0, which is now the third iteration, there’s a lot more initiatives based on small businesses, because we’re not stopping, we’re not taking the foot off the gas. … It’s not a political statement that they’re the economic engines. They’re technology engines.”

Erwin also says Defense Department service contracts appear to be the sweet spot for small businesses. About half of all defense contracts are for services. “The Department of Defense made a decision to focus on areas that were very healthy for small businesses,” said Gudger. “We focused on areas such as knowledge base services, electronic and communications, and facilities management.”

On another Small Business related topic, the National Business League of Greater Washington is hosting ProBiz 2015 at the FHI 360 Conference Center on Thursday, July 16, 2015 from 8:00AM to 5:00PM. Through this event, small businesses will learn how to increase revenues, and major organizations will improve their productivity by expanding the quality of their supply chain.

Join SBA Resource Partners Karen Williams (SCORE); Nick Rajpara (SBDC); and Angie Duncanson (WBC) during a panel discussion moderated by Economic Development Specialist Ralph Buchanan, on the services provided; followed by Laura Mann Eyester of the Office of General Counsel, as she provides a deep dive into the HUBZone certification program. The Conference Center is located at 1825 Connecticut Ave. NW, Washington, DC 20009. To register go to the following link: www.probiz2015.eventbrite.com.